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Posts Tagged ‘Wilmington’

Delaware spends more than 46 other states for per-capita spending per resident, at nearly $9,800 per person per year (National Association of State Budget Officers and the Kaiser Family  Foundation). The News Journal decided to explore this topic in an editorial:

Tax dollars not buying progress for Delaware

How much is it going to cost?

That’s a question we ask ourselves almost daily, whether we’re at Wawa for gas or on amazon.com for, well, you name it.

That’s a question we rely upon our lawmakers to answer when it comes to the major issues facing Delaware.

Lawmakers asked those questions on Thursday.

First, the Board of Education declined to approve the Wilmington Education Improvement Commission’s plan in part because board members want clearer cost estimates.

Then, after Gov. Jack Markell’s final State of the State address, some lawmakers wondered if taxpayers are already spending too much on education.

Based on the health of our state, the question shouldn’t be “How much is it going to cost?” Rather, we need to start asking “What are we getting in return?”

Indeed.

Let’s hope this year our public decision-makers figure out how to balance thew budget without negatively impacting our lives or the future of the state.

Do you believe we’re getting our money’s worth from state spending? Why or why not?

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rightwisconsin.com

Today’s News Journal article “Seeking Delaware manufacturing jobs, GOP targets unions” talks about the concept of a “right to work zone”, which differs from Right to Work in that RTW laws covers whole state while a RTW zone covers only a specific geographic area. Senator Greg Lavelle has proposed one this year; he did the same last year.

As expected, the unions were out in full force against it:

“Sam Lathem, president of the Delaware AFL-CIO, the umbrella organization representing Delaware unions, called Lavelle’s legislation a “desperate reach” that would lead to lower wages.

“We need to find a way to re-create and grow the middle class. Right-to-work isn’t going to do that,” Lathem said.”

The News Journal article pointed out the problem, though whether John Starkey intended to do so is another idea.

“Now Republicans are reviving a proposal they hope will revitalize Delaware manufacturing. But the plan, which would make it harder for unions to organize, is controversial and deeply polarizing in a state where the governor’s office and the General Assembly are controlled by Democrats, who still count union members among their staunchest base supporters.

Markell, a Democrat, appears poised to oppose the legislation. A spokeswoman said available studies on whether right-to-work legislation creates jobs are “inconclusive at best.”

“Gov. Markell remains focused on efforts that employers tell him are most important for job and economic growth, such as providing training for a skilled workforce and spurring innovation,” spokeswoman Kelly Bachman said.”

To quote from Hamlet, “Ay, there’s the rub.” You can see very quickly why even just a zone- not the whole state, but an area to try this idea out- is considered a threat to organized labor and those who benefit from it.

Here’s the summary of the Law, SB 54:

“This Act allows the Director of the Delaware Economic Development Office to create right-to-work zones as part of its inducements to bring new businesses to Delaware and requires these zones to be offered for manufacturing businesses hiring at least 20 employees. It also exempts those manufacturing businesses from their gross receipts taxes for their first 5 years.”

Let’s talk about these zones. Suppose GM’s former plant on Boxwood road was turned into a right to work zone, along with say 1000 square acres surrounding the plant’s legal boundaries. Only businesses locating in these zones would be able to receive the benefit, and with only 1000 square acres there would be a limit. However, those businesses which do receive a space in the RTW zone would be able to avoid the problems which modern day labor unions bring: namely, the political activity (including which many union members may not agree with) and the pressure to give workers more money and benefits even if the company is unprofitable or if doing so makes the company unprofitable. They can make an effort to grow manufacturing and if the effort succeeds, then more zones can be replicated, or perhaps if the General Assembly and Governor see the benefit of one, they can enact a RTW law for the entire state.

On the chance the law is not beneficial, or even proves detrimental, the zone can be removed and the rest of the state is unaffected or the law can be repealed if the zones are a failure.

Now, other factors will affect the success or failure of these zones. Notice that the gross receipts tax would not apply for five years. This is because our state’s gross receipts tax is a job-killer; businesses who meet a certain income threshold pay a tax on all revenue over the threshold, not counting profit and loss. So even if your business has a bad year, you still get socked with higher taxes.

Electricity is expensive in this state, about 23% higher than the national average. Plus, the crime reputation for Wilmington, and to a lesser extent Dover, absolutely gives a negative vibe to outsiders looking to relocate a business or build a new factory. Don’t let anyone tell you Wilmington’s crime problem isn’t hurting the reputation of the entire state.

But RTW zones might give the state a chance to attract capitalists without having to “invest” (subsidize) large businesses to move here, because most of the biggest “investments” go to major companies like Fisker, Bloom, Kraft, etc.. If you owned a casual sit-down restaurant, and the only way you could get customers is to pay them anywhere from $30-50 to get them into the store, who is going to look at customers coming in and say “yes, this is a successful restaurant” just because a few customers are inside your restaurant now?

We hope the state will look at ways to improve our economic climate, to attract businesses and “job creators” of all types, from start-ups to established companies, from sole proprietorships to multinational corporations, to anyone who has job opportunities for Delawareans and is willing to invest in our state for the long-term. These goals are achievable, they work, and they offer a new chance to get our economy going again.

By the way, the courts have found right to work zones are legal. What is not currently legal (and is being challenged) is right to work at the County/City level. This is due to how local government entities are structured.

Lastly, if you need more proof that manufacturing in Delaware is in serious trouble:

Delaware manufacturing employment

1990: 43,200

1991: 48,600

1992: 44,800

1993: 44,100

1994: 44,200

1995: 44,300

1996: 39,700

1997: 41,5002

1998: 43,100

1999: 44,400

2000: 41,300

2001: 39,000

2002: 38,300

2003: 35,000

2004: 34,900

2005: 33,500

2006: 35,000

2007: 33,700

2008: 32,300

2009: 29,900

2010: 26,800

2011: 25,600

2012: 25,600

2013: 25,600

2014: 25,600

2015: 25,800

Source: U.S. Department of Labor, Bureau of Labor Statistics

Yes, we have lost roughly 40% of our manufacturing jobs, and most of these workers are NOT in a private sector labor union, which has even lower numbers. Given the situation, what can and should unions do to keep their members supporting their unions? How could union leaders improve their offering which helps both workers and employers?

In our next blogpost, we’re going to introduce a new concept called “Union Economies”. This idea is pretty interesting, and it comes from our friends at the Mackinac Center.

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The big news in Delaware today (not the awesome magazine, but today today) is that the state Department of Education has issued Christina School District with an ultimatum: close the three “Priority Schools” in the district (Stubbs Elementary, Bancroft Elementary, and Bayard Middle School) by the end of February 2015 or else turn them over to an outside manager. If they don’t comply the state will take them over.

Whereas Red Clay SD countered the state’s takeover plan with one of their own which did not require teachers to reapply for their jobs or for school principals to be fired and replaced with new $160,000 a year principals, Christina SD did not come up with a plan the state finds acceptable. Their school board also voted to reject the turnaround plan. So now the state is flexing its political muscle to get control over these three schools.

If you look at a map of Christina (click this link) you’ll see the district boundaries make no sense.

Christina serves the city of Newark and the suburban area around it, and then a piece of downtown Wilmington about 12 miles from its easternmost edge. Newark and Wilmington are not the same city and each has its own challenges. We at CRI believe there should be changes to how districts are drawn and the City of Wilmington should have its own school district. All three of the schools scheduled for closure or loss to outside managers or the state are in the city limits of Wilmington. Nonetheless, Christina is in charge and must come to a decision soon. What will they do?

If the past is any indicator Christina will fight the state all the way to the last week of February. In 2013 the district initially rejected Delaware’s requirements under Race To The Top but changed a portion of their plan when the state threatened to withhold $2.3 million in RTTT funding from the district unless it complied with federal directives. However, Governor Markell and Secretary Murphy are not exactly pushovers; we expect them to stand their ground on this issue and fully take over the schools at the end of the month if Christina doesn’t counter the Priority Schools plan with one the state finds acceptable. However, in the end the Governor has more power than the district and they know it; they will have to implement some reforms or else those three Wilmington schools will probably be turned into charters or turned over to private “for profit” entities who will (most likely) hire private management to oversee a turnaround effort.

Whatever happens, we will be watching with interest. From our end we have no stake in this battle except to see education in Delaware turn around. Again we repeat: 51st in SAT score performance, 9th in per-student per-year spending, and 4th in per capita administrative budget (number of administrators to students). Without serious education reform the state will continue to see businesses decline to invest here (unless they get goodies from DEDO) because our public education system isn’t “world class” enough to produce enough educated young people needed to take the high-paying jobs which move people out of poverty. Parents with children who have jobs in New Castle County will move over the border to Pennsylvania or send their children to one of Delaware’s private schools (we are #1 in the country for highest ration of children in private schools as a percentage of the total student body).

We are involved in our own education reform efforts. Look for CRI, in the days and weeks ahead, to continue to talk about Education Savings Accounts and why Delaware needs them. or visit http://www.caesarrodney.org and learn about what you can do to Impact Delaware.

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wallpaperput.com

2015 will soon be upon us and for those who are passionate defenders of freedom and liberty our work just goes on when the clock strikes midnight. Here is CRI in review and our goals for 2015:

  • Dave Stevenson’s lawsuit against DNREC and former DNREC Secretary Collin O’Mara is still ongoing. Dave and the other three plaintiffs, including CRI Director John Moore, won standing to continue their lawsuit. We will refrain from making a prediction on a court ruling less we jinx the lawsuit but we are optimistic the Plaintiffs will win. This is because in order to get standing the Plaintiffs had to prove they had a valid reason to sue in the first place, such as being aggrieved by the Defendants actions. Winning means stopping DNREC from changing the rules on how many carbon permits can be sold at carbon auctions, saving Delaware taxpayers over $100 million a year in increases in utility bills.
  • We testified in favor of HB353, the Parent Empowerment Education Savings Account Act (PEESAA). Jim Hosley, our former CEE Director, spoke in favor as did a dozen Wilmington parents and grandparents (and one student!) and the leaders of Tall Oak Classical Academy. The bill was tabled in the House Education Committee, a move we are unfortunately not surprised by. However, we hope 2015 will be a better year as more and more people realize the need to improve Delaware’s education system, and the only effective way to make the changes our students need to be prepared for the future is to provide parents with school choice options to do what’s best for the child. CRI will always maintain the belief that parents and/or legal guardians can make a better choice about their children’s education than politicians and bureaucrats in the state Department of Education.
  • We brought in Dr. Bartley Danielsen, business and economics professor from North Carolina State University to keynote our Sixth Annual Dinner. Dr. Danielsen has proposed a theory tying in environmental benefits to school choice. The basic theory is, parents moved to the suburbs to flee poorly performing public schools which left a lot of people uneducated and unable to find respectable work, and many turned to crime as a result. His theory is if inner city schools were to improve their quality, many families would move back to the cities from the suburbs and the result would be a reduction in traffic and environmental pollution from people driving from the suburbs to the cities. View is presentation here and here

In addition to these challenges, we still have issues Delaware must resolve in order to improve our economy:

  • End to the prevailing wage which makes public construction costs so expensive many end up getting no work at all. See: Rockwood Museum.
  • A Right to Work law for Delaware. Union leaders are pushing the “scab” theory that somehow union members will drop out and reap all the benefits the union “works” to get. We have responded by noting that a) manufacturing businesses have responded by moving factories elsewhere, depriving Delawareans of job opportunities. See: loss of auto industry, Valero plant, Evraz Steel plant, Georgia Pacific plant. b) as a moral issue, should union bosses have the right to take someone’s money just because someone works at a particular location? What if the union bosses don’t serve their member’s needs, such as organizing or donating to political causes or candidates the members don’t support?

We wrote: “While in the short run unionization may force wages up for those involved, in the long run closed shops reduce capital spending and induce the out-migration of jobs and workers.”

Read HERE and HERE and HERE

  • tax reform. Delaware is one of just five states with a gross receipts tax (tax on sales, even before factoring in profit/loss and expenses). Three of the other four don’t have an income tax and the only state with both like Delaware is Virginia who has lower tax rates. Coupled with high corporate and personal income taxes while Nevada and North Dakota compete with us for corporate business, and without reforms we will see money and jobs leave the state at even higher numbers.

Merry Christmas, Happy Hanukkah, Happy Holidays, and a Happy New Year to all. Let’s be thankful for a good 2014 and hope for better things in 2015.

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In a press release sent out on April 23, Wilmington Mayor Jim Baker initiated a plan to layoff approximately 75 unionized city employees. The plan comes in response to the government employees union’s rejection of pay/benefit reductions proposed by Mayor Baker.

From the release, “Wilmington Mayor James M. Baker today directed Chief of Staff William Montgomery to begin the process of identifying and then notifying as many as 75 unionized City employees that they will be laid-off in the FY 2010 fiscal year beginning July 1.”

The release continues, “The Mayor said he has now regrettably been forced to plan for lay-offs because the Presidents of AFSCME Locals 320, 1102, 1102B, Fraternal Order of Police Lodge #1 and International Association of Firefighters Local 1590 have rejected his request that the City’s union employees forego salary and step increases next fiscal year while maintaining their current jobs, salaries and benefits.”

The City currently faces at $20 million budget deficit.

In addition the proposed layoffs, “Baker has cut $15 million in proposed or planned City spending and requested $7.2 million in new taxes and fees for City residents and businesses.”

We have noted previously that the City should work to shake its image as anti-business. The move towards increasing taxes on businesses and residents only compounds the unfriendly climate in the city and magnifies the perception of being anti-business. It is no secret that the City needs new business and new jobs…sadly movement towards these goals is not occuring.

In his statement, Mayor Baker said, “The City’s union leadership has now placed some of their members in peril. I did not want a single City employee to lose his or her job. Our employees have done such great work in recent years to improve City services, and I wanted us to be able to maintain the current level of service to citizens, especially in police and fire. I thought that asking union employees to forego salary and step increases in exchange for keeping their jobs was a fair request. I am very sad and extremely disappointed to think I was wrong.”

Mr. Baker hits the nail on the head. It seems as though the unions, in forcing government’s hand, prefer layoffs. The 8% paycut proposed by Governor Markell is strongly opposed by state employees, the union and many others. If this proposal fails, layoffs may result at the state level too.

Any way you cut it, the City, the counties and the State are facing perilous times and most proposals will not be liked by one group or another. But the issues remains that the reason our governments are in the situations they are in is spending. And still, there have been no proposals at restraining spending through the short-, mid- and longer- terms to help guide us when boom times reappear.

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